The usage of cryptocurrencies in Nigeria, particularly Bitcoin and Tether’s USDT, has been steadily increasing, according to the most recent global cryptocurrency adoption study from reputable research organization Chainalysis. The most populous country in Africa has had a surprising 9% gain in cryptocurrency usage over the last two years, despite a bear market for the industry. It is now one of just six nations globally whose transaction volume has increased during this time.
Stablecoins are embraced by Nigerians when the naira falls by 65%
At first glance, the rise in cryptocurrency usage in Nigeria may appear unexpected considering the overall decline in the crypto industry. But it’s strongly related to the devaluation of Nigeria’s national fiat currency, the Naira, which has plummeted by 65% compared to the US dollar since June as a result of the Central Bank’s decision to let the Naira’s exchange rate fluctuate. Nigerian families and companies have begun using stablecoins and Bitcoin to preserve their money and facilitate transactions as a result of the Naira’s devaluation.
In this scenario, stablecoins in particular have become an indispensable instrument. Stablecoins have been dubbed “crypto’s killer application for the African continent” by Bisola Asolo, the CEO and co-founder of Super, a web3 billing platform. Asolo explains that the adoption of stablecoins is driven by their ability to preserve wealth more effectively than the volatile local currency. With $19.7 billion in daily trading activity, Binance is the largest cryptocurrency exchange in the world and provides Nigerians with an easy method to access USDT and other cryptocurrencies.
This accessibility has been a major factor in the nation’s growing embrace of cryptocurrencies, especially USDT. Chainalysis reports that between August 2021 and July 2023, stablecoin transactions on Nigerian exchanges totaled an astounding $60 billion. The importance of stablecoins in the Nigerian cryptocurrency ecosystem is shown by this statistic. The depreciating value of the Naira and the rising rate of inflation are the main drivers of Nigerians’ flight to safety. The choice to let the market set the value of the Naira made an already unstable economic environment worse.
Stablecoins and Binance’s contribution to the cryptocurrency boom
The Stakeholders in Blockchain Technology Association of Nigeria’s executive secretary, Rume Ophi, draws attention to the predicament of Nigerians. He mentioned that the value of a dollar was about 700 Naira a few months ago, but now it is 1,220 Naira. It is a 520 Naira spread, he said. Applying this to $100,000 proves to be substantial. To ease transactions, businesses in Nigeria are also adopting USDT and other stablecoins. Tour providers are more frequently seen quoting their packages in US dollars and accepting USDT as payment. The benefit of hassle-free international transactions and quick money transfers is provided by stablecoins.
Rume Ophi highlights this convenience, noting that transferring money and conducting business in Africa may be highly stressful, while stablecoins make value transfers easy. In only a few minutes, stablecoins will do it, and the value will be sent. Binance has also profited from the Central Bank of Nigeria’s 2021 decision to exclude commercial lenders from providing services to cryptocurrency exchanges. Peer-to-peer (P2P) cryptocurrency trading increased as a result of this regulatory action, and Binance was a major participant in this market. In essence, the Binance P2P exchange rate between USDT and Naira has replaced the conventional exchange run by Bureaux De Change agents as a parallel currency market.
Nigerians’ increasing reliance on cryptocurrencies, especially Bitcoin and USDT, is a testament to their capacity to adapt and persevere in the face of difficult economic circumstances. Nigerians have found that stablecoins, in particular, have become a lifeline, helping them to protect their savings and simplify bank operations. The circumstance also emphasizes how important it is for emerging economies to have easily accessible and user-friendly cryptocurrency adoption platforms such as Binance. The uptake of cryptocurrencies and stablecoins is probably going to continue as Nigerians manage economic uncertainties and a fluctuating Naira.
